Federal Reserve Board Vice Chair Jefferson says higher energy prices are lifting inflation while 3-1/2 to 3-3/4 percent rate range leaves FOMC well positioned

In a speech at the 2026 Bank of Japan-Institute for Monetary and Economic Studies Conference, Federal Reserve Board Vice Chair Philip N. Jefferson said he expects U.S. growth to moderate this year as high energy costs weigh on households, while inflation has moved notably higher because of the energy shock but should decline later this year as the effects of tariffs and higher energy prices wane. He said the Federal Open Market Committee's decision in late April to keep the federal funds target range at 3-1/2 to 3-3/4 percent leaves policy well positioned to respond to incoming data, the evolving outlook, and the balance of risks. Jefferson highlighted three global developments he is monitoring: higher energy prices linked to the conflict in the Middle East, rapid advances in artificial intelligence, and disrupted trade flows since the pandemic. He described the U.S. labor market as broadly stable, with both hiring and firing at relatively low levels, but said risks to the labor market are somewhat skewed to the downside and risks to his inflation outlook are tilted to the upside. He also reiterated his commitment to returning inflation to the FOMC's 2 percent target and said he has not prejudged the next meeting.